Will Procurement Be The Hottest Job Of The Decade?

Judith Magyar

From moleskin to fishing rods, Cirque du Soleil procures a lot of strange stuff because of the nature of its business. The bungee costumes worn by the performers of the Mystère production, for example, each have over 2,000 hand-glued sequins. Sourcing everything – from crystals and buttons to logistical services – around the world is a herculean task, running 24/7, 365 days per year. Automating processes and making the right procurement decisions saves time and money, so Cirque du Soleil implemented a cloud procurement solution to lighten the administrative burden.

But what does the sourcing team do with its time now that the old jobs have been replaced by automated processes? For one thing, they focus more on negotiating with suppliers, letting the system handle the processes and the people handle the decisions.

Strategic spending

Regardless of where they’re based or what they do, companies around the world need to make faster and more strategic sourcing decisions to retain a competitive edge. Etihad Airways, for example, morphed from regional player into the fastest growing airline in the history of commercial aviation. To deal with such growth, the company needed to consolidate systems, streamline its source-to-contract process, and improve integration of new suppliers. Again, people played a key role.

“At Etihad, we realized we had to completely change the way we procure and source,” says Tracey Tops, a business analysis manager who helped transform procurement and supply management at Etihad Airways with a cloud procurement solution.

“We operate on a massive scale, dealing with 28,000 suppliers and over 70,000 purchase orders per year. Previously, procurement was an inward-looking gatekeeping function with limited stakeholder engagement. To move from a governance-style function to a value-adding one, we needed experienced project leads, executive sponsors, change champions, and plenty of training. Now, our buyers are business enablers engaging with all stakeholders to deliver the best value based on trustworthy supplier information.”

Next-generation buyers and sellers

There are two aspects of procurement that will never go away: people and processes. Buying and selling is a human interaction. Traditionally, the buyer side of an organization is spend-conscious. It’s a process-driven B2B world, where the focus is on cost savings and margins. In other words, it’s serious and tedious.

The sales side of the house, on the other hand, is cool and exciting, because it’s where you see the money. It’s all about doing business, driving revenue, and engaging with customers. That’s changing.

“Today’s buyers and sellers come from a generation of people who need to touch what they buy. They are used to family shopping excursions,” says Mohammed AlKhotani, president of SAP Ariba marketing in the Middle East and North Africa (MENA). “Millennials, however, are using technology to get things done quickly. Today, machines are making decisions about what to buy and when to buy. But that doesn’t mean jobs will vanish! It just means jobs will change. Procurement always was and always will be about negotiation.”

Procurement and principles

SAP Ariba is the Facebook of procurement – it’s where companies connect to do business. Buyers and sellers can collaborate, transact, and access a digital marketplace with millions of trading partners around the world. Automation takes the burden of administration off the buyers’ shoulders and frees them up to think and act more strategically in a much broader ecosystem.

For example, online auctioning tools are widening networks and making the buying process more dynamic. Buyers can compete to obtain goods or services by offering increasingly higher prices, or in a reverse auction, sellers compete to obtain business from the buyer and prices decrease as the sellers underbid each other. After the auction closes, buyers can simulate scenarios to find the best possible options based on specific criteria and data before making a final decision.

Buyers can embed rules to ensure that the buying process is compliant with their procurement policies, putting procurement at the heart of fair trade and sustainable supply chains. A study by Cone Communications found that nine in 10 consumers expect companies to not only make a profit, but also to operate responsibly to address social and environmental issues.

Today, many enterprises have green initiatives driven in part by the commitment of global stakeholders to the UN Sustainable Development Goals to transform the world. For many suppliers, compliance is not a luxury; it’s a business necessity. Goals like responsible production and consumption, decent working conditions, and gender equality all trickle down into the supply chain.

“People want to associate with companies driven by principles,” says Mohammed AlKhotani. “Business networks provide transparency and insight into the supply chain, enabling companies to take a stand and drive ethical behavior.”

So when it comes to saving money and doing good, procurement can be a game-changer in the years ahead.

If we want to retain humanity’s value in an increasingly automated world, we need to start recognizing and nurturing Human Skills for the Digital Future.

This article originally appeared on Forbes SAP Voice.


How Machine Learning Helps To Improve Security: Part 2

Lane Leskela

In Part 1 of this series, we reviewed the continued disconnect between corporate IT security spending and the cause of most security incidents. Most breaches are known to be caused by the misuse or takeover of user-access authorizations. In this blog, we suggest some machine-learning-based approaches to user access that will help improve organizational security.

Five ways machine learning can improve enterprise security

1. Repudiate compromised credential attacks with risk-based models that validate user identity based on behavioral pattern analysis.

Machine learning uses constraint-based and pattern-matching algorithms. These techniques are ideal for analyzing behavioral patterns of people signing in to systems that contain sensitive information. Compromised credentials are the most common and destructive type of information security breach. Applying machine learning to this challenge using a risk-based model that “learns” user behaviors over time is superior to many other intrusion-detection methods being used today.

2. Maintain “zero tolerance” security settings using risk-scoring models that include evaluations of changing information management requirements.

Machine learning enables security frameworks to scale, providing threat assessments and graphic analysis that across locations. Scoring models are valuable in planning and executing growth strategies quickly across multiple geographic regions.

Some CEOs view multifactor authentication as a foundation of security frameworks that can help them grow faster. Machine learning enables IT resources to accelerate the development of these frameworks and to scale them globally. Removing security-based barriers to business growth potential is a high priority for several forward-thinking CEOs. A scalable security framework can contribute to total revenue growth alongside major distribution and selling channels.

3. Streamline security access for new employees with 360-degree, role-based risk models that can be customized by IT for specific needs.

Some CEOs are worried about how poor user experiences can impact productivity. Multifactor authentication workflows that have slowed user performance can be improved with contextual insights based on more precise person-based risk models. As machine learning models “learn” the behaviors of employees related to access, user authentication accuracy improves. By learning a range of approved patterns over time, machine learning can accelerate authorized employee access to secure services and systems.

4. Apply predictive analytics to the sources of data security threats, threat profiles, and remediation priorities.

CIOs, CSOs, and security teams increasingly need enterprise-wide visibility to all potential threats, prioritized by potential frequency and impact severity. Machine-learning algorithms can provide this capability with threat assessments and priority threat identification at a level of sophistication that allows both incident prevention and predictive response capabilities.

5. Stop malware-based breaches by learning how hackers modify code bases to bypass authentication.

One of the most popular techniques used by hackers to penetrate enterprise networks is to use impersonation-based logins and passwords that deliver malware to corporate servers. Malware breaches are notoriously challenging to track and remediate. One effective approach involves implementing an enterprise security framework with specific scenarios that trap, stop, and eliminate malware.

Fortunately, machine learning has been embedded in SAP S/4HANA to monitor breach activity from social media and the “dark” (non-indexed) web and in SAP Business Integrity Screening to take advantage of predictive analytics pointed at fraud detection and suspicious payment blocking.

The SAP GRC team will be exhibiting at several events related to cybersecurity this year. We hope you’ll join us there.

Learn more about the full range of SAP security offerings, and read more blogs in our GRC series.

And read 3 Reasons CFOs & Finance Professionals Should Attend SAPPHIRE NOW to learn about what’s happening at this year’s SAPPHIRE NOW and ASUG Conference – panels, keynotes, discussions, presentations, and endless ways to connect to people and gain new ideas for streamlining processes. Join SAP’s finance team and partners June 5–7, in Orlando, Florida.

Follow SAP Finance online: @SAPFinance (Twitter) | LinkedIn | Facebook | YouTube

This article originally appeared on SAP Analytics.


Lane Leskela

About Lane Leskela

Lane Leskela, global business development director, Finance and Risk, for SAP, is an accomplished enterprise software leader with years of experience in customer advisory, marketing, market research, and business development. He is an expert in risk and compliance management software functions, solution road maps, implementation strategy, and channel partner management.

A Finance Employee Working In The Digitalization Era

Vaag Durgaryan

The fourth industrial revolution (digitalization era) is happening right now. Business models, macroeconomic trends, and, most important, new technologies have motivated change in workplaces, organizations, and economies, regardless of their size, strength, or place on the map. Professor Klaus Schwab, founder and executive chairman of the World Economic Forum, noted, “We need leaders who are emotionally intelligent and able to model and champion cooperative working. They’ll coach, rather than command; they’ll be driven by empathy, not ego. The digital revolution needs a different, more human kind of leadership.”

Finance employees are part of this fast-changing world. Accordingly, they should take part in the new reality by having special skills. A skill is the ability to carry out a task with determined results. The skills that we will discuss here will be important for finance employees’ success in the future.

Program management

In a growing business or organization, volumes will grow. Sooner or later, processing of volume transactions will be automated or digitized. That means significant time will free up for finance sales-support personnel. They will naturally reinvest that freed-up capacity into finance support of very large or complex transactions. Such transactions would need involvement of legal, accounting, business, and other experts. Thus, one of the skills needed by finance employees will be to program-manage large or complex transactions. The ability to pull together the right people – those with the right expertise to create and execute a program plan for a large or complex transaction and to lead without formal authority – is one skill that will be much needed in the future.

Embracing cultural differences

Multinational corporations have country offices in the majority of regions and in most of the countries in those regions. Because the world is now globalized, expatriates from many backgrounds work in many regional and country teams. Hence, the finance person of the future needs to be able to comfortably get along with all cultures, have conversations based on trust and openness, and consider different ways of doing business depending on the culture of the people he or she would work with.

Emerging technologies

Blockchain, robotics, artificial intelligence, and machine learning are all examples of new or emerging (reborn) technologies. Those technologies will indeed change the way of working in the future, but how? That is yet to be known. However, the finance employee of the future should be aware of these technologies that might disrupt finance and be able to work comfortably in the new reality.

For more on this topic, read “Automation, Simulation, and Talent Management for Finance” by Tony Klimas of EY and “Six Best Practices For A Future-Ready Finance Talent Strategy” by Nilly Essaides of The Hackett Group.

And read 3 Reasons CFOs & Finance Professionals Should Attend SAPPHIRE NOW to learn about what’s happening at this year’s SAPPHIRE NOW and ASUG Conference – panels, keynotes, discussions, presentations, and endless ways to connect to people and gain new ideas for streamlining processes. Join SAP’s finance team and partners June 5–7, in Orlando, Florida.

Follow SAP Finance online: @SAPFinance (Twitter) | LinkedIn | Facebook | YouTube


Vaag Durgaryan

About Vaag Durgaryan

Vaag Durgaryan is the commercial finance director for SAP in the Middle East and North Africa, which comprises of over 20 countries. Starting in 2017, he oversees a multinational team that provides finance expertise, knowledge, and strategy outlook for finance sales support in the region. Prior to that, Vaag was chief of staff for the CFO for SAP Global Field Finance and co-drove global transformation initiatives with focus on process simplification and people enablement. He holds an Executive MBA degree from ESSEC Business School and Mannheim Business School. Vaag has a passion in digitalization and learning culture.

Hack the CIO

By Thomas Saueressig, Timo Elliott, Sam Yen, and Bennett Voyles

For nerds, the weeks right before finals are a Cinderella moment. Suddenly they’re stars. Pocket protectors are fashionable; people find their jokes a whole lot funnier; Dungeons & Dragons sounds cool.

Many CIOs are enjoying this kind of moment now, as companies everywhere face the business equivalent of a final exam for a vital class they have managed to mostly avoid so far: digital transformation.

But as always, there is a limit to nerdy magic. No matter how helpful CIOs try to be, their classmates still won’t pass if they don’t learn the material. With IT increasingly central to every business—from the customer experience to the offering to the business model itself—we all need to start thinking like CIOs.

Pass the digital transformation exam, and you probably have a bright future ahead. A recent SAP-Oxford Economics study of 3,100 organizations in a variety of industries across 17 countries found that the companies that have taken the lead in digital transformation earn higher profits and revenues and have more competitive differentiation than their peers. They also expect 23% more revenue growth from their digital initiatives over the next two years—an estimate 2.5 to 4 times larger than the average company’s.

But the market is grading on a steep curve: this same SAP-Oxford study found that only 3% have completed some degree of digital transformation across their organization. Other surveys also suggest that most companies won’t be graduating anytime soon: in one recent survey of 450 heads of digital transformation for enterprises in the United States, United Kingdom, France, and Germany by technology company Couchbase, 90% agreed that most digital projects fail to meet expectations and deliver only incremental improvements. Worse: over half (54%) believe that organizations that don’t succeed with their transformation project will fail or be absorbed by a savvier competitor within four years.

Companies that are making the grade understand that unlike earlier technical advances, digital transformation doesn’t just support the business, it’s the future of the business. That’s why 60% of digital leading companies have entrusted the leadership of their transformation to their CIO, and that’s why experts say businesspeople must do more than have a vague understanding of the technology. They must also master a way of thinking and looking at business challenges that is unfamiliar to most people outside the IT department.

In other words, if you don’t think like a CIO yet, now is a very good time to learn.

However, given that you probably don’t have a spare 15 years to learn what your CIO knows, we asked the experts what makes CIO thinking distinctive. Here are the top eight mind hacks.

1. Think in Systems

A lot of businesspeople are used to seeing their organization as a series of loosely joined silos. But in the world of digital business, everything is part of a larger system.

CIOs have known for a long time that smart processes win. Whether they were installing enterprise resource planning systems or working with the business to imagine the customer’s journey, they always had to think in holistic ways that crossed traditional departmental, functional, and operational boundaries.

Unlike other business leaders, CIOs spend their careers looking across systems. Why did our supply chain go down? How can we support this new business initiative beyond a single department or function? Now supported by end-to-end process methodologies such as design thinking, good CIOs have developed a way of looking at the company that can lead to radical simplifications that can reduce cost and improve performance at the same time.

They are also used to thinking beyond temporal boundaries. “This idea that the power of technology doubles every two years means that as you’re planning ahead you can’t think in terms of a linear process, you have to think in terms of huge jumps,” says Jay Ferro, CIO of TransPerfect, a New York–based global translation firm.

No wonder the SAP-Oxford transformation study found that one of the values transformational leaders shared was a tendency to look beyond silos and view the digital transformation as a company-wide initiative.

This will come in handy because in digital transformation, not only do business processes evolve but the company’s entire value proposition changes, says Jeanne Ross, principal research scientist at the Center for Information Systems Research at the Massachusetts Institute of Technology (MIT). “It either already has or it’s going to, because digital technologies make things possible that weren’t possible before,” she explains.

2. Work in Diverse Teams

When it comes to large projects, CIOs have always needed input from a diverse collection of businesspeople to be successful. The best have developed ways to convince and cajole reluctant participants to come to the table. They seek out technology enthusiasts in the business and those who are respected by their peers to help build passion and commitment among the halfhearted.

Digital transformation amps up the urgency for building diverse teams even further. “A small, focused group simply won’t have the same breadth of perspective as a team that includes a salesperson and a service person and a development person, as well as an IT person,” says Ross.

At Lenovo, the global technology giant, many of these cross-functional teams become so used to working together that it’s hard to tell where each member originally belonged: “You can’t tell who is business or IT; you can’t tell who is product, IT, or design,” says the company’s CIO, Arthur Hu.

One interesting corollary of this trend toward broader teamwork is that talent is a priority among digital leaders: they spend more on training their employees and partners than ordinary companies, as well as on hiring the people they need, according to the SAP-Oxford Economics survey. They’re also already being rewarded for their faith in their teams: 71% of leaders say that their successful digital transformation has made it easier for them to attract and retain talent, and 64% say that their employees are now more engaged than they were before the transformation.

3. Become a Consultant

Good CIOs have long needed to be internal consultants to the business. Ever since technology moved out of the glasshouse and onto employees’ desks, CIOs have not only needed a deep understanding of the goals of a given project but also to make sure that the project didn’t stray from those goals, even after the businesspeople who had ordered the project went back to their day jobs. “Businesspeople didn’t really need to get into the details of what IT was really doing,” recalls Ferro. “They just had a set of demands and said, ‘Hey, IT, go do that.’”

Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants.

But that was then. Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants. “If you’re building a house, you don’t just disappear for six months and come back and go, ‘Oh, it looks pretty good,’” says Ferro. “You’re on that work site constantly and all of a sudden you’re looking at something, going, ‘Well, that looked really good on the blueprint, not sure it makes sense in reality. Let’s move that over six feet.’ Or, ‘I don’t know if I like that anymore.’ It’s really not much different in application development or for IT or technical projects, where on paper it looked really good and three weeks in, in that second sprint, you’re going, ‘Oh, now that I look at it, that’s really stupid.’”

4. Learn Horizontal Leadership

CIOs have always needed the ability to educate and influence other leaders that they don’t directly control. For major IT projects to be successful, they need other leaders to contribute budget, time, and resources from multiple areas of the business.

It’s a kind of horizontal leadership that will become critical for businesspeople to acquire in digital transformation. “The leadership role becomes one much more of coaching others across the organization—encouraging people to be creative, making sure everybody knows how to use data well,” Ross says.

In this team-based environment, having all the answers becomes less important. “It used to be that the best business executives and leaders had the best answers. Today that is no longer the case,” observes Gary Cokins, a technology consultant who focuses on analytics-based performance management. “Increasingly, it’s the executives and leaders who ask the best questions. There is too much volatility and uncertainty for them to rely on their intuition or past experiences.”

Many experts expect this trend to continue as the confluence of automation and data keeps chipping away at the organizational pyramid. “Hierarchical, command-and-control leadership will become obsolete,” says Edward Hess, professor of business administration and Batten executive-in-residence at the Darden School of Business at the University of Virginia. “Flatter, distributive leadership via teams will become the dominant structure.”

5. Understand Process Design

When business processes were simpler, IT could analyze the process and improve it without input from the business. But today many processes are triggered on the fly by the customer, making a seamless customer experience more difficult to build without the benefit of a larger, multifunctional team. In a highly digitalized organization like Amazon, which releases thousands of new software programs each year, IT can no longer do it all.

While businesspeople aren’t expected to start coding, their involvement in process design is crucial. One of the techniques that many organizations have adopted to help IT and businesspeople visualize business processes together is design thinking (for more on design thinking techniques, see “A Cult of Creation“).

Customers aren’t the only ones who benefit from better processes. Among the 100 companies the SAP-Oxford Economics researchers have identified as digital leaders, two-thirds say that they are making their employees’ lives easier by eliminating process roadblocks that interfere with their ability to do their jobs. Ninety percent of leaders surveyed expect to see value from these projects in the next two years alone.

6. Learn to Keep Learning

The ability to learn and keep learning has been a part of IT from the start. Since the first mainframes in the 1950s, technologists have understood that they need to keep reinventing themselves and their skills to adapt to the changes around them.

Now that’s starting to become part of other job descriptions too. Many companies are investing in teaching their employees new digital skills. One South American auto products company, for example, has created a custom-education institute that trained 20,000 employees and partner-employees in 2016. In addition to training current staff, many leading digital companies are also hiring new employees and creating new roles, such as a chief robotics officer, to support their digital transformation efforts.

Nicolas van Zeebroeck, professor of information systems and digital business innovation at the Solvay Brussels School of Economics and Management at the Free University of Brussels, says that he expects the ability to learn quickly will remain crucial. “If I had to think of one critical skill,” he explains, “I would have to say it’s the ability to learn and keep learning—the ability to challenge the status quo and question what you take for granted.”

7. Fail Smarter

Traditionally, CIOs tended to be good at thinking through tests that would allow the company to experiment with new technology without risking the entire network.

This is another unfamiliar skill that smart managers are trying to pick up. “There’s a lot of trial and error in the best companies right now,” notes MIT’s Ross. But there’s a catch, she adds. “Most companies aren’t designed for trial and error—they’re trying to avoid an error,” she says.

To learn how to do it better, take your lead from IT, where many people have already learned to work in small, innovative teams that use agile development principles, advises Ross.

For example, business managers must learn how to think in terms of a minimum viable product: build a simple version of what you have in mind, test it, and if it works start building. You don’t build the whole thing at once anymore.… It’s really important to build things incrementally,” Ross says.

Flexibility and the ability to capitalize on accidental discoveries during experimentation are more important than having a concrete project plan, says Ross. At Spotify, the music service, and CarMax, the used-car retailer, change is driven not from the center but from small teams that have developed something new. “The thing you have to get comfortable with is not having the formalized plan that we would have traditionally relied on, because as soon as you insist on that, you limit your ability to keep learning,” Ross warns.

8. Understand the True Cost—and Speed—of Data

Gut instincts have never had much to do with being a CIO; now they should have less to do with being an ordinary manager as well, as data becomes more important.

As part of that calculation, businesspeople must have the ability to analyze the value of the data that they seek. “You’ll need to apply a pinch of knowledge salt to your data,” advises Solvay’s van Zeebroeck. “What really matters is the ability not just to tap into data but to see what is behind the data. Is it a fair representation? Is it impartial?”

Increasingly, businesspeople will need to do their analysis in real time, just as CIOs have always had to manage live systems and processes. Moving toward real-time reports and away from paper-based decisions increases accuracy and effectiveness—and leaves less time for long meetings and PowerPoint presentations (let us all rejoice).

Not Every CIO Is Ready

Of course, not all CIOs are ready for these changes. Just as high school has a lot of false positives—genius nerds who turn out to be merely nearsighted—so there are many CIOs who aren’t good role models for transformation.

Success as a CIO these days requires more than delivering near-perfect uptime, says Lenovo’s Hu. You need to be able to understand the business as well. Some CIOs simply don’t have all the business skills that are needed to succeed in the transformation. Others lack the internal clout: a 2016 KPMG study found that only 34% of CIOs report directly to the CEO.

This lack of a strategic perspective is holding back digital transformation at many organizations. They approach digital transformation as a cool, one-off project: we’re going to put this new mobile app in place and we’re done. But that’s not a systematic approach; it’s an island of innovation that doesn’t join up with the other islands of innovation. In the longer term, this kind of development creates more problems than it fixes.

Such organizations are not building in the capacity for change; they’re trying to get away with just doing it once rather than thinking about how they’re going to use digitalization as a means to constantly experiment and become a better company over the long term.

As a result, in some companies, the most interesting tech developments are happening despite IT, not because of it. “There’s an alarming digital divide within many companies. Marketers are developing nimble software to give customers an engaging, personalized experience, while IT departments remain focused on the legacy infrastructure. The front and back ends aren’t working together, resulting in appealing web sites and apps that don’t quite deliver,” writes George Colony, founder, chairman, and CEO of Forrester Research, in the MIT Sloan Management Review.

Thanks to cloud computing and easier development tools, many departments are developing on their own, without IT’s support. These days, anybody with a credit card can do it.

Traditionally, IT departments looked askance at these kinds of do-it-yourself shadow IT programs, but that’s changing. Ferro, for one, says that it’s better to look at those teams not as rogue groups but as people who are trying to help. “It’s less about ‘Hey, something’s escaped,’ and more about ‘No, we just actually grew our capacity and grew our ability to innovate,’” he explains.

“I don’t like the term ‘shadow IT,’” agrees Lenovo’s Hu. “I think it’s an artifact of a very traditional CIO team. If you think of it as shadow IT, you’re out of step with reality,” he says.

The reality today is that a company needs both a strong IT department and strong digital capacities outside its IT department. If the relationship is good, the CIO and IT become valuable allies in helping businesspeople add digital capabilities without disrupting or duplicating existing IT infrastructure.

If a company already has strong digital capacities, it should be able to move forward quickly, according to Ross. But many companies are still playing catch-up and aren’t even ready to begin transforming, as the SAP-Oxford Economics survey shows.

For enterprises where business and IT are unable to get their collective act together, Ross predicts that the next few years will be rough. “I think these companies ought to panic,” she says. D!


About the Authors

Thomas Saueressig is Chief Information Officer at SAP.

Timo Elliott is an Innovation Evangelist at SAP.

Sam Yen is Chief Design Officer at SAP and Managing Director of SAP Labs.

Bennett Voyles is a Berlin-based business writer.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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Survey: Four Ways Machine Learning Will Disrupt Your Business

Dan Wellers and Dirk Jendroska

We are entering the era of the machine learning enterprise, in which this subset of artificial intelligence (AI) capabilities will revolutionize operating models, shake up staffing methods, upend business models, and potentially alter the nature of competition itself. The adoption of machine learning capabilities will be limited only by an organization’s ability to change – but not every company will be willing or able to make such a radical shift.

Very soon, the difference between the haves and the have-nots of machine learning will become clear. “The disruption over the next three to five years will be massive,” says Cliff Justice, principal in KPMG’s Innovation and Enterprise Solutions team. Companies hanging onto their legacy processes will struggle to compete with machine learning enterprises able to compete with a fraction of the resources and entirely new value propositions.

For those seeking to be on the right side of the disruption, a new survey, conducted by SAP and the Economist Intelligence Unit (EIU), offers a closer look at organizations we’ve identified as the Fast Learners of machine learning: those that are already seeing benefits from their implementations.

Machine learning is unlike traditional programmed software. Machine learning software actually gets better – autonomously and continuously – at executing tasks and business processes. This creates opportunities for deeper insight, non-linear growth, and levels of innovation previously unseen.

Given that, it’s not surprising that machine learning has evolved from hype to have-to-have for the enterprise in seemingly record time. According to the SAP/EIU survey, more than two-thirds of respondents (68%) are already experimenting with it. What’s more, many of these organizations are seeing significantly improved performance across the breadth of their operations as a result, and some are aiming to remake their businesses on the back of these singular, new capabilities.

So, what makes machine learning so disruptive? Based on our analysis of the survey data and our own research, we see four primary reasons:

1. It’s probabilistic, not programmed

Machine learning uses sophisticated algorithms to enable computers to “learn” from large amounts of data and take action based on data analysis rather than being explicitly programmed to do something. Put simply, the machine can learn from experience; coded software does not. “It operates more like a human does in terms of how it formulates its conclusions,” says Justice.

That means that machine learning will provide more than just a one-time improvement in process and productivity; those improvements will continue over time, remaking business processes and potentially creating new business models along the way.

2. It creates exponential efficiency

When companies integrate machine learning into business processes, they not only increase efficiency, they are able to scale up without a corresponding increase in overhead. If you get 5,000 loan applications one month and 20,000 the next month, it’s not a problem, says Sudir Jha, head of product management and strategy for Infosys; the machines can handle it.

3. It frees up capital – financial and human

Because machine learning can be used to automate any repetitive task, it enables companies to redeploy resources to areas that make the organization more competitive, says Justice. It also frees up the employees within an organization to perform higher-value, more rewarding work. That leads to reduced turnover and higher employee satisfaction. And studies show that happier employees lead to higher customer satisfaction and better business results.

4. It creates new opportunities

AI and machine learning can offer richer insight, deeper knowledge, and predictions that would not be possible otherwise. Machine learning can enable not only new processes, but entirely new business models or value propositions for customers – “opportunities that would not be possible with just human intelligence,” says Justice. “AI impacts the business model in a much more disruptive way than cloud or any other disruption we’ve seen in our lifetimes.”

Machine learning systems alone, however, will not transform the enterprise. The singular opportunities enabled by these capabilities will only occur for companies that dedicate themselves to making machine learning part of a larger digital transformation strategy. The results of the SAP/EIU survey explain the makeup of the evolving machine learning enterprise. We’ve identified key traits important to the success of these machine-learning leaders that can serve as a template for others as well as an overview of the outcomes they’re already seeing from their efforts.

Learn more and download the full study here.  

 


About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

Dirk Jendroska

About Dirk Jendroska

Dr. Dirk Jendroska is Head of Strategy and Operations Machine Learning at SAP. He supports the vision of SAP Leonardo Machine Learning to enable the intelligent enterprise by making enterprise applications intelligent. He leads a team working on machine learning strategy, marketing and communications.